Kennedy Industries primed for pump biz boost, new HQ

Kennedy Industries executives Jeff Nachtweih (left) and Mark Hemeyer show off the site of the company's new headquarters in Milford Township.

KENNEDY INDUSTRIES INC.

Where: Milford Township

What it does: Services, repairs and distributes pump systems and valves.

Customers: Automotive, energy, steel, chemical and other industries; municipal and state governments

Employs: 70, up from 50 about five years ago. Expects to add 10-15 in next three years.

Revenue: $25 million in 2013, up from $17 million in 2008

Lean-running auto plants, cost-conscious municipal customers and an increasing flow of sales and service calls from new markets are priming the business pump of Kennedy Industries Inc.

The upsurge has led to a new headquarters building and a steady stream of hiring.

The Milford Township-based pump system and valve service, repair and distributor company has seen sales climb 50 percent and employees by 40 percent in the past five years — and its owners think that could be repeated by the end of the decade.

Traditional lines of business such as servicing pump stations, balancing pump rotors and replacing pump systems for power plants or automotive plants have been flowing over in new directions lately.

Clients are requesting Web-based data management tools and more sophisticated engineering — and that requires more highly skilled employees and more office space.

Business pours in

Kennedy Industries broke ground this month on a 100,000-square-foot headquarters building, which majority owner and President Jeff Nachtweih hopes to have ready for occupancy by spring.

The move will consolidate Kennedy's 70 employees from a 30,000-square-foot repair center and corporate offices along Pontiac Trail on Technical Drive and a 40,000-square-foot warehousing and submersible-pumps center in New Hudson into one location along Pontiac Trail east of Old Plank Road, less than two miles from the current offices.

The company, which employed 50 about five years ago, expects to add 10-15 in the next three years. Nachtweih said growth could continue at half a dozen new jobs a year until it reaches 100 employees at the new building.

Brighton-based Brivar Construction Co. is general contractor on the new location, and Michael McKelvey of Ann Arbor is project architect.

Kennedy serves a mix of customers in the automotive, energy, steel, chemical and other industries, along with municipal and state governments.

Nachtweih and company Vice President Mark Hemeyer said new government demand for data management tools and cost controls in water and wastewater systems has added to Kennedy's growth, along with the recovery of the automotive industry and new repair service business in other states. Revenue for Kennedy reached $25 million in 2013, up from $17 million in 2008.

Capacity building

Engineering new pump systems, and new tools to monitor them, is in demand from cities and townships looking to manage water and wastewater collection costs and from energy companies looking for efficiency in plant pumps as a means of lean process improvement.

But Kennedy's automotive sales are just a response to increased production.

"We do get some growth along with automotive," Hemeyer said. "Our products often go in plants, and if you get (conditions) like we're getting now where plants increase use by 33 percent or 66 percent growth by adding a second or third shift, then some facilities will need service and maintenance sooner."

The company has added four engineers and two engineering students since 2010. About 30 employees work on the Kennedy shop floor machining or repairing pump components, a line of business that was just beginning when Nachtweih joined the company in 1988.

Building new shafts, shaft sleeves, valves and other components can mean repairing a pump system in a fraction of the time and cost compared to ordering a replacement from the original manufacturer, he said.

"It's a collection of equipment that allows us to make one or two replacement units of a product, not large volumes of it, because that's usually all our customer needs," Nachtweih said.

Municipal governments, in particular, have been a growing revenue source. Kennedy Industries launched a new Web-based monitoring and data management tool, KI System Master, about five years ago. Hemeyer said the data tool, hosted on Kennedy's own servers, allows municipalities to monitor water and wastewater systems and predict when flooding or pump failure will occur.

That can help reduce repair and operating costs, an appealing feature for governments with smaller budgets and staff.

This year, Kennedy signed a contract to develop a data management system for Battle Creek and already has provided the system for Northville and Northville Township. The company has water or wastewater contracts with Marshall near Battle Creek and Pittsfield Township near Ann Arbor and installed a wastewater collection system for Livingston County's Genoa Township.

"When a lift station has dual pumps and you lose one, the other would continue to operate, but you'd know that a lot sooner with (the data tool) and get a handle on it," said Thomas Casari, director of the Northville Township Department of Public Services, which installed the System Master tool about six months ago.

"But on the water side, we have a couple booster stations in the water tower, but we might want to know the tower is filling. If it fills on the wrong time and it happens to be a heavy-use day, we might exceed your capacity limits from Detroit (Water and Sewerage Department) and pay for that. Now you can see that happening and stop that or directly control what time it fills."

Kennedy Industries was founded in 1959 by Calvin Kennedy, who sold the business in 1985 to Ed Eberle and Darrell Underwood. Nachtweih became a co-owner in 1995 when he and fellow employees Dave Lake and Steve Sadler bought out the previous owners.

About three years ago, Nachtweih bought out Lake and Sadler, although the two continue to co-own the Milford building and collect lease payments.

Out-of-state biz springs up

Hemeyer will complete a five-year purchase plan to become a 25 percent owner of Kennedy at the end of this year, with Nachtweih retaining the rest. The two also will own half of the new building apiece.

Kennedy receives queries routinely from private equity firms looking to buy a stake in the company, but the owners have had little interest.

Joseph Andronaco, president and co-owner of Farmington Hills-based Corrosion Fluid Products Corp., said his company doesn't serve municipal customers but has seen growth of its own from manufacturing customers as well as from the economic recovery.

Corrosion Fluid serves steel, energy, food and beverage and some pharmaceutical customers, and its PumpServe division has seen about 50 percent revenue growth since the 2008 market collapse, he said. Revenue peaked at around $100 million for Corrosion Fluid in 2012.

"We've also invested substantially in pump repair; that's one of the biggest areas of growth for our company," Andronaco said. "But it takes a very large investment.

"The big pump repair houses, like Kennedy and ourselves and a few others, we engineer some upgrades that give a (pump) strength to resist torque or (features that add) more flow efficiency.

"Companies today will still go with their current pump until it crashes out, and to order a new one might take six months, but someone who specializes in replacement can turn it around in two to four weeks."

Nachtweih said that about 10 percent of Kennedy's service business is now in other states, such as Illinois, Wisconsin, Pennsylvania and New York. Among its larger customers for new pump components are DTE Energy Co. and the Michigan Department of Transportation, but Nachtweih said the company plans to grow its non-Michigan customer base substantially.

On a local level, Hemeyer said, machining new parts is what gives Kennedy a competitive edge in sales against several out-of-state companies targeting the same manufacturing customers.

"A lot of our competition in this market is a sales office based in someone's basement or wherever," he said. "And if you need a replacement part, they order it for you.

"Because we can be a 24/7 service and repair center if we need to be, our customers appreciate if they have a problem at 3 in the morning, we can work on it at 3 in the morning. Because when does something usually break and need repair? At a very inopportune time."

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